SA auto industry may need to shift gears

Andrew Kirby, president and CEO of Toyota South African Motors. Picture: Supplied

The African export market will likely become increasingly important for South African automotive manufacturers as a growing number of European countries phase out petrol and diesel cars over the coming years, the president and chief executive of Toyota South Africa Motors has argued.

The United Kingdom has just become the latest jurisdiction up north to propose a ban of new petrol and diesel cars from 2040, raising questions about the long-term sustainability of South African car exports to Europe.

Speaking at the manufacturer’s head office, Andrew Kirby said this was partly the reason for advocating a focus on Africa.

“I think all the automotive brands around the world will agree that Africa is likely to be the fastest growing auto market in the world.”

He stressed however that it could take another “five to ten years” to reach such a point.

Kirby said some of the statements around the ban on petrol and diesel cars have been exaggerated and did not distinguish between passenger cars, light commercial vehicles and trucks, creating the impression that it applied to the whole market, which was not true.

In many first world countries diesel cars would be phased out first and more hybrid vehicles will be introduced, he said.

“We will need to have more innovation in the petrol-based internal combustion engines but certainly the demand is going to switch a little bit.”

Toyota was a big exporter of Hilux and Fortuner vehicles, and this is not going to change, he added.

While electric vehicles were more suited to light-body vehicles used for shorter commutes, hybrids made more sense for robust heavier vehicles, he said.

“It is not going to be an on-off switch, but certainly we need to consider how do we make sure we are part of this global supply chain, can build vehicles in volume and are still able to supply,” he added.

While local automakers can supply Euro 6 engines into Europe, it can only sell Euro 3 vehicles to the South African market due to the absence of clean fuel.

Kirby said the new clean fuel bill was supposed to be introduced in 2017, but was delayed.

“So [it is] quite difficult to talk about electric vehicles when you can’t even get clean fuel introduced. So we are going to have to think about that and if we don’t do that it is also going to be difficult for us as a manufacturing base.”

While Africa is often cited as the next significant opportunity for automotive manufacturers, the African market has taken significant strain since 2013.

What was different now?

Kirby said in many African markets changes in legislation were curtailing used vehicle imports, which is a key issue.

Many countries are also introducing regulations to get their own automotive manufacturing industry off the ground. This offered an opportunity for partnerships, which could create a win-win scenario and significant infrastructure development is taking place.

“What we really need is the commodity cycle to change and I think that could happen in the next few years.”

Oops! We could not locate your form.

AUTHOR PROFILE

Ingé joined Moneyweb in April 2013. She writes on a variety of topics including tax, markets and investment. She has a Master’s degree in Journalism and a Bachelor of Accounting, both from Stellenbosch University.

Join our mailing list to receive top business news every weekday morning.